[Proposal] RSR Unlocking Milestone Plan - Revised Framework

[nevin.freeman]

Summary

Confusion Capital proposes that we proceed with the milestone-based unlocking approach (milestone 1: $2.5M in NARR, enabling the unlock of 3B RSR) with two modifications based on RSR holder discussion: (1) A minimum price of $0.005 to allow unlocking, and (2) a USD price cap of $0.015, after which the amount of RSR unlocked would be less than 3B.

RSR holders will vote on this proposal starting August 27th, so you must withdraw RSR from exchange accounts into your own custody by August 26th to participate. Staked and vote-locked RSR across Ethereum, Base and BNB Chain is all eligible to vote with no action needed. The vote will last until September 3rd.

All voting will be carried out on Snapshot, which accounts for your RSR token balances by letting you digitally sign with your wallet, but does not cost any gas fees.

Any modification to the stated structure would require a further RSR holder vote to approve.

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Video version

If you would like to hear me explain this proposal live, you can watch the community call recording here – see minute 27:00 for the start of the RSR unlocking framework presentation: Roam Meeting · Reserve Q2 Community Call

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Proposal

In May I proposed replacing the current Bitcoin-shaped RSR unlock curve with a milestone-based system tied to the Reserve ecosystem’s economic progress.

Since then, we have received substantial community feedback and continued discussing the framework. In particular, the discussion raised two important questions:

1. How should the RSR price at the time of the milestone affect the unlock?

2. How much discretion should Confusion Capital have to modify the framework after it is adopted?

Based on that discussion, we are proposing the following revised framework.

1. Milestone 1: $2.5M NARR

The first milestone would be reached when the Reserve ecosystem achieves $2.5M in Net Annualized Recurring Revenue (NARR).

NARR is intended to measure the sustainable economic output of the Reserve ecosystem after accounting for the costs required to generate that revenue.

In this context, “recurring” does not mean contractually recurring revenue in the SaaS sense. It means revenue that is recurring in nature and can reasonably be expected to continue if current economic conditions persist.

The metric is annualized using trailing data specifically to prevent temporary spikes or one-off events from triggering the milestone.

At a high level:

- Revenue = revenue generated across the Reserve ecosystem.

- Partner share = revenue distributed to external parties rather than retained within the RSR ecosystem.

- Ongoing incentive spend = spending required on an ongoing basis to incentivize users to hold or use Reserve products.

- Net revenue = revenue minus partner share minus ongoing incentive spend.

Short-term incentives used to launch or initially promote a product may be treated as customer acquisition costs rather than ongoing incentive spend when there is a reasonable expectation that the incremental revenue generated will repay those incentives within two years.

Current NARR methodology

For the Reserve ecosystem as it exists today, the calculation is approximately:

Index DTFs:

Avg(6mo TVL Fees) × 12 + Median(6mo Mint Fees) × 12
– Avg(2Q Incentives) × 4 – Avg(6mo External Share) × 12

Yield DTFs:

Avg(6mo Gross Revenue) × 12 – Avg(2Q Incentives) × 4

Total NARR:

Sum of NARR across the Reserve ecosystem.

We use an average for relatively stable revenue streams such as TVL fees and a median for more episodic revenue streams such as mint fees in order to reduce the impact of temporary spikes.

Importantly, the definition of NARR is intended to be business-model agnostic. Index and Yield DTFs represent the ecosystem’s current revenue sources, but the unlocking framework should not depend on those being the only revenue-generating activities the Reserve ecosystem ever encompasses.

If new products or revenue streams emerge, revenue that satisfies the same underlying principles of being sustainable, recurring in nature, and net of the relevant partner shares and ongoing incentives should be incorporated into NARR. The methodology used to incorporate any material new revenue source would be disclosed transparently.

2. Milestone 1 RSR allocation: 3B RSR

Once the $2.5M NARR milestone is satisfied, up to 3 billion RSR would become eligible for unlocking, subject to the RSR price conditions described below.

As in the original proposal, an RSR unlock should not be interpreted as an immediate sale or distribution of those tokens.

Unlocked RSR would become available for strategic use by the project and could be deployed over time based on the needs of the ecosystem, with any treasury RSR sales and purchases continuing to be reported transparently on a quarterly basis.

3. Automatic unlock within the RSR price range

The RSR price condition would be based on the 30-day moving average RSR price, rather than the spot price on the date the milestone is reached.

If the $2.5M NARR milestone has been satisfied and the 30-day moving average RSR price is between $0.005 and $0.015, the 3B RSR unlock would occur automatically under this policy.

This establishes a predefined range in which both the revenue and price conditions for Milestone 1 have been satisfied.

4. RSR price floor: $0.005

If the 30-day moving average RSR price is below $0.005 when the $2.5M NARR milestone is satisfied, the 3B RSR would not automatically unlock.

In that situation, the project could:

- wait until the 30-day moving average RSR price returns to the $0.005–$0.015 range, at which point the 3B RSR unlock could proceed automatically under the existing framework; or

- propose a modification to the framework, which would require approval from the RSR community through a Snapshot vote before it could be implemented.

The purpose of the floor is to avoid automatically proceeding with a large token unlock when RSR is trading materially below the price range contemplated when this milestone was designed.

5. RSR price ceiling: $0.015

If the 30-day moving average RSR price is above $0.015 when the $2.5M NARR milestone is satisfied, automatically unlocking the full 3B RSR could represent a substantially larger USD allocation than originally contemplated.

For reference, 3B RSR at $0.015 is worth $45M.

Therefore, if the 30-day moving average RSR price is above $0.015, the project could:

- automatically unlock up to $45M worth of RSR, calculated using the actual 30-day moving average RSR price; or

- propose a different approach, which would require approval from the RSR community through a Snapshot vote.

This keeps the automatic economic value of the Milestone 1 unlock capped at the $45M represented by 3B RSR at the top of the predefined price range.

6. Community governance for changes to the framework

One important change from the original RFC is that deviations from the framework would no longer rely solely on Confusion Capital discretion.

Any modification to the milestone, RSR price parameters, unlock amount, or other material elements of this policy outside the mechanisms explicitly described above would require RSR holder approval through a Snapshot vote based on RSR ownership.

We also propose that Confusion Capital, ABC Labs, and Best Friend Finance abstain from these votes with company-owned RSR.

The goal is for these votes to reflect the preferences of non-treasury RSR holders.

Individual team members would still be free to participate using RSR they personally own, since they are individual stakeholders in the network.

I, Nevin, will abstain from voting on whether to enact this initial proposal, to make sure the vote is a 100% clear signal of whether others endorse it, given that I had such a strong hand in crafting it.

I must add the disclaimer that this is a non-binding pledge made by Confusion Capital, not a legally binding contract offered to RSR holders, as such a contract could be seen to affect the regulatory status of the RSR token, which is not our intent and would not be in the best interest of the Reserve ecosystem.

7. One milestone at a time

We still believe it is preferable to define one milestone at a time rather than establish a complete unlocking schedule for the remaining RSR today.

The ecosystem, its business model, its revenue sources, and the value of RSR may look very different by the time Milestone 1 is reached.

Once Milestone 1 is satisfied, we would return to the community with a proposed Milestone 2 and its corresponding RSR unlock parameters.

This gives RSR holders forward visibility into the next milestone while avoiding the need to make assumptions today about what the Reserve ecosystem will look like several years from now.

Summary

Under the proposed framework:

• Milestone 1: $2.5M NARR

• Maximum Milestone 1 allocation: 3B RSR

• RSR price measurement: 30-day moving average

• RSR price floor: $0.005

• RSR price ceiling: $0.015

• $0.005–$0.015: 3B RSR unlocks automatically once the NARR milestone is satisfied

• Below $0.005: wait for the price to return to range, or propose an alternative through Snapshot

• Above $0.015: automatically unlock up to $45M worth of RSR at the 30-day moving average price, or propose an alternative through Snapshot

• Changes outside these predefined rules: require a community Snapshot vote

• Treasury-owned RSR: Confusion Capital, ABC Labs, and Best Friend Finance would abstain from voting

• Future milestones: defined one at a time as the ecosystem develops

The overarching principle remains the same as in the original proposal: future RSR unlocks should be tied to demonstrated economic progress rather than the passage of time.

The additions above are intended to make the framework more predictable across different RSR price environments, reduce company discretion, and make the policy robust enough to accommodate Reserve revenue streams that may not exist today.

Action required: withdraw RSR from exchanges to vote!

RSR holders will vote on this proposal starting August 27th, so you must withdraw RSR from exchange accounts into your own custody by August 26th to participate. Staked and vote-locked RSR across Ethereum, Base and BNB Chain is all eligible to vote with no action needed. The vote will last until September 3rd.

All voting will be carried out on Snapshot, which accounts for your RSR token balances by letting you digitally sign with your wallet, but does not cost any gas fees.

Nevin
President, Confusion Capital
CEO, ABC Labs

[Raphael_Anode]

I’m currently writing up a short explainer for the community vote and have a few questions so it’s accurate:

1.) Which options will the Snapshot vote have? Assuming Yes, No and Abstain.
2.) Will Abstain count towards quorum?
3.) Will No count towards quorum?
4.) How long will the voting window be? IIRC 7 days, but confirming here
5.) Given that any changes to milestone plans require a community vote, who has proposer authority? Is this gated? (imo it should be)
6.) This proposal and subsequent vote was announced in the quarterly community call, on the forum and then given a seven (eight) day notice period. Is this how ABC plans to announce other proposals, or is this tbd? (I suggest formulating a clear procedure and sticking to it)
7.) The proposal passes with a simple majority I assume. Yes > No. Please confirm. Or do you see a threshold other than simple majority (50% total yes for instance, or 67%)

Thanks and looking forward to supporting this.

[starl3xx]

1. Yes/No/Abstain
2. Yes. Quorum counts total voting power cast, so Abstain counts toward it.
3. Yes
4. 7 days
5. Only Confusion Capital can propose changes, which then must be ratified by vote
6. Yes
7. Simple majority, For > Against, with the 1B quorum on top.

[Braden]

Price floor needs to be above $.01. Otherwise looks good and appreciate the move forward on this.

[flameingoindigo]

I believe the first unlock of 3M RSR has one extra decimal zero.

You stated you will not feel relief until $RSR returns to ATH. Any unlock before ATH makes regaining that price far more distant.

Early adopters helped @reserveprotocol gain attention and spike the price to almost $0.12 in 2021. Since then, five years of terrible price action have followed. I say this not as a hater - I love the project and the idea of an asset-backed currency. If I earned for every person I introduced to $RSR over the years, I would have a decent pile by now.

But it is time to give $RSR price action a chance so early investors who stayed faithful can recover. That cannot happen soon under the current unlock plan.

Many great projects are soaring while we remain stuck for years. At these prices, EVERYONE who invested in $RSR would sell at a loss, and most obviously refuse to do so.

This is the worst time for a community that already has too many haters to resume unlocks before reasonable market adoption and price action.

Why unlock now? Why refuse the community’s proposal to burn $RSR?

The $RSR community was amazing in 2019 and 2020, with no thought that the team would act against holders’ interests. It is time to regain trust before the next bull market. Without it, we face another four or more years of pain.

My concerns about “unlock milestone plan” as a long-term holder:

1. The overhang still exists, just delayed and conditional

Unlocking up to 3B RSR (even with a price band) still adds a large potential supply that the market WILL PRICE IN. History shows that “unlocked but not sold” tokens create ongoing narrative pressure. People remember the 8.3B unlocked in 2025 that mostly stayed in treasury wallets (btw most of those should still be sitting there, right? So why another unlock starting at $0.005?).

Another 3B becoming eligible reinforces the feeling that a large controlled supply can still hit the market later. This will play an important role in price action simply because psychology works in certain ways that cannot be changed even with a reasonably explained “unlocking milestone plan”.

Price action with unlocks will be worse. Fact.

2. Trust in how the unlocked RSR will actually be used

The plan says the tokens will be deployed “strategically” over 1–2 years with quarterly reporting. That still leaves Confusion Capital with significant discretion on timing, size, and purpose of any sales or distributions. Past transparency around treasury operations has been limited. I would want clearer rules or community veto rights on large deployments, not just retrospective reports.

3. NARR can be debated and potentially managed

$2.5M net annualized recurring revenue is presented as clear proof of product-market fit. In practice, “net” involves judgments about what counts as incentive spend, partner shares, one-off items, etc. There is room for interpretation. A metric that can be influenced creates uncertainty about whether the unlock is truly earned or partly engineered.

4. The price ceiling protects the project more than holders in a strong market

If RSR is trading above $0.015 (30-day average), the unlock is capped at roughly $45M worth instead of the full 3B tokens. That reduces dilution when the token is stronger, which is good in theory, but it also means the project receives less RSR (or locks in a USD value) precisely when the token has more purchasing power. It can feel asymmetric.

5. No meaningful supply reduction

Many holders (me included) wanted a large permanent burn of treasury RSR (the 30B discussions — even smaller burns would demonstrate that price action for holders is still a topic). This plan explicitly rejects that path for now. The ongoing fee burns are positive but small relative to the remaining locked supply.

The decision prioritizes keeping dry powder over scarcity. In plain English — the protocol values its potential cash flow over holders’ potential cash flow.

6. Only one milestone is defined

Future milestones are left open. Flexibility is understandable, but it means we do not know the full long-term emission path. That reduces predictability and discourages potential new buyers.

7. Non-binding nature

The proposal is carefully framed as a non-binding pledge (to avoid regulatory issues). That is pragmatic, but it also means there is limited hard commitment if priorities shift later.

Not just to criticize:

It is a clear improvement over the old system, but not ideal. The old Bitcoin-style continuous unlocking was worse because it released tokens regardless of progress and created constant dilution FUD. Tying further unlocks to actual net revenue is more rational and aligns incentives better. The price band and the fact that Nevin/Confusion Capital will abstain from the vote are positive signals. Pausing unlocks until a real milestone is hit is also respectful of holders.

I would still prefer stronger safeguards:

• Clearer community approval requirements for spending large portions of the unlocked RSR

• A partial permanent burn of some treasury tokens alongside (or instead of) part of the unlock

• More defined future milestones so the path is less open-ended

• Stronger, more frequent, and independently verifiable reporting on treasury RSR positions and uses

[Rsr0x]

This is not an amendment to the Milestone Plan currently going to vote on August 27th, and it is not intended to compete with it. I mostly support the revised framework as written in terms of the price floor (though would prefer to raise this to 0.01 as mentioned above but it’s acceptable at 0.005 for now), the USD ceiling, and especially the shift away from Confusion Capital discretion toward Snapshot governance are all clear improvements on the May RFC.

What follows is a proposed companion mechanism, intended for consideration alongside Milestone 2 once Milestone 1 has been satisfied. The Milestone Plan solves the question of when RSR unlocks. It does not address the question of terminal supply.

Roughly 30B RSR remains locked. Every unlock schedule proposed to date reduces uncertainty about the timing of that supply reaching the market, but none of it reduces the quantity. For a holder trying to value RSR, the overhang is a persistent discount applied to every other piece of good news the ecosystem generates. Revenue milestones are worth less per dollar when the market knows that success mechanically brings forward a large supply event.

I want to be precise about one thing, because I think it is where most burn proposals go wrong: burning locked RSR does not offset an unlock. The 3B in Milestone 1 was never circulating. Burning another 3B from the slow wallet would not change the float on the day of the unlock. Circulating supply rises by 3B either way. Anyone framing a burn as a way to neutralise sell pressure at the moment of unlocking is describing something the mechanism cannot do.
The value of a burn is different, and in my view larger: it converts an open-ended supply question into a bounded one, and it does so at the exact moment the ecosystem is demonstrating it needs less of that supply than originally assumed.

Proposal: burn on sale, not on unlock

The current framework already states that an unlock should not be read as a sale or distribution. Take that at face value and attach the burn to disposals rather than to unlocking:
For every 1 RSR sold from the treasury into the market, N RSR is permanently burned from the locked pool.

Unlocked RSR deployed for partnerships, liquidity provision, backstop capitalisation, incentives, or any non-sale strategic use carries no burn cost whatsoever. Only conversion of RSR into cash triggers it. This has three properties I think are worth more than a flat unlock-linked burn:

1. It targets the actual perception problem. The “the team is dumping” narrative attaches to sales, not to unlocks. A mechanism priced on sales addresses the thing holders actually object to, and leaves untouched every use of treasury RSR that is straightforwardly good for the ecosystem.
2. It imposes discipline where discretion is highest. Quarterly reporting of treasury sales is good transparency but carries no cost. Attaching a burn makes each sale a decision with a price attached, which is the correct incentive structure for a treasury that is otherwise unconstrained in this dimension.
3. It is self-limiting. If the ecosystem needs to sell little, the burn costs little. The mechanism only bites in the scenario where it should.

On the ratio: I would not propose a 1:1 ratio at Milestone 1, and I think proposals that do are underweighting how expensive that is. The remaining supply is the ecosystem’s war chest. At $2.5M NARR, the project is early enough that optionality over future incentives, partnerships and backstop capital is worth a great deal, and burning is irreversible. Milestone 1 is the most expensive point on the curve at which to give that up. But the marginal value of treasury RSR falls as organic revenue grows. Once the ecosystem is generating meaningful cash flow, the locked pool stops being the primary engine of growth and starts being mostly an overhang. That argues for an escalating ratio:
-Milestone 1: 0 (or nominal)
-Milestone 2: modest, a fraction of each RSR sold
-Milestone 3 onward: rising, potentially to 1:1 or above as organic revenue takes over

The schedule would be set per milestone through the same Snapshot process the current proposal establishes, so nothing is committed today beyond the principle.

Secondary proposal: use-it-or-lose-it
A simpler mechanism that could stand alone or sit alongside the above:
RSR unlocked under a given milestone and not deployed within 24 months is burned rather than returning to general treasury. This costs nothing if the project is executing. It caps how far ahead of actual need the unlocking can run, and it removes the incentive to unlock defensively.

A note on framing: I would ask that any version of this that moves forward be framed as treasury and capital discipline rather than as supply or price management, and I have tried to write it that way here. Nevin’s disclaimer in the Milestone Plan makes the reason explicit, the pledge is deliberately non-binding because a binding commitment could be read as affecting RSR’s regulatory status. A supply-reduction mechanism whose stated purpose is influencing market price invites exactly that reading. A mechanism whose stated purpose is constraining treasury discretion and bounding dilution does not, and I think that is also the more accurate description of what it does.

Questions for the community

1. Is burn-on-sale preferable to a flat burn tied to unlock quantity, or is the simplicity of a flat burn worth its bluntness?
2. Should the burn ratio be fixed per milestone in advance, or set at the time of each disposal?
3. Is 24 months the right window for a use-it-or-lose-it provision, or does that create pressure to deploy suboptimally near the deadline?
4. Does the team see a scenario in which they would want to sell treasury RSR at a scale where this mechanism would be genuinely constraining? If so, that scenario is the one worth discussing

[Raphael_Anode]

Please find a guideline to the vote mechanics here: Community Snapshot Votes Guidelines

[Ranger]

Why not tie it to burning RSR? For every 1 RSR burned, the team could unlock 0.5 RSR.

The milestone approach is a better path forward than the emissions curve; however, it could create negative selling pressure in the market. How long would it take to burn those 3 billion RSR and offset the inflation?

I believe the best approach would be to tie unlocks to the amount of RSR burned. This would address the inflation problem while creating a system that directly rewards the team for progress, generates income, and creates value for holders.

Although the team currently has plenty of funds, and even if the protocol does not generate enough burns to finance the initiatives required for progress, the team could always burn the ‘locked’ RSR to fund new initiatives. Burn 2 billion locked RSR and unlock 1 billion RSR.

The objective, however, is for the protocol to generate burns and for the team to receive a continuous flow of unlocked RSR to finance itself. If this were to fail, the team could still burn part of the locked supply to generate newly unlocked RSR.

This is by far the best approach because it would make the protocol inherently deflationary. Holders would no longer need to fear dilution or ‘dumping,’ while the team would retain the means to obtain funds needed to do whatever is necessary to advance the protocol.

At the same time, the new unlocks would avoid scrutiny from the community, since they would be deflationary and inherently beneficial to RSR’s supply dynamics and price action, allowing the team to operate freely (and fast) without first consulting the community.

This can be 1:0.7 or 1:0.6, not necessarily 1:0.5.

[zeb]

Interesting mechanism you are proposing here. Will have to think it through more, but interesting approach.

[TheRealHondo]

I like it in general, it is a very lean approach. No “if and than and maybe”. It follows the SMART goal definition rules - no interpretation needed. That is good, very easy to measure.

If the team does not like to lose tokens due to “forced burns” also a 1:1 or even something like 1:10 would be ok for me. (we should just calculate that the netto unlocking does not change too much for the team and we avoid the discussion of beeing forced to burning some of their stakes (that will not happen - Nevin is clear about it - and I also prefer that all the “savings account” can be used by the team for the projects future with some flexibility.) Let’s see how to get it long term sustainable and not leading to a flash in the pan - e.g. a forced burn of a huge portion.

Long story short, it is a nice idea due to the clear and easy link to the projects success and TVL. The main point of dicussion will be the ratio.

[0xd15co]

This is a huge step forward and I love that the community is able to vote on it, but after thinking about @Ranger 's idea regarding burns, I am now convinced that his proposal might solve the same problems more elegantly.

[0x1000]

If this proposal goes through, I for one would jump back on the $RSR wagon again. I back this.

[ham]

Thank you for the time and effort you’ve put into this, Nevin / Agus. It’s clear you’ve spent a lot of time on it and listened to community feedback. I think adding the price band is an elegant way of addressing some of the concerns raised.

I still have concerns about how short-term incentives can be categorised as acquisition costs where there is a reasonable expectation that the incremental revenue generated will repay those incentives within two years. In particular, I worry this leaves too much room for interpretation around what should and shouldn’t be deducted from NARR, especially given how incentive spend has been handled over the last two years.

While I don’t think the proposal is perfect, I think it’s good enough to move forward with and I’ll be supporting it. Importantly, ratifying this framework doesn’t change anything today. The unlock only becomes relevant once Reserve reaches $2.5m in NARR, at which point I expect the ecosystem, its revenues, RSR token price and the discussion around future funding to look very different from where they do today.

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I also prefer this framework to the proposed emissions-and-burns alternative posted by @Ranger. While tying unlocks directly to RSR burns is simple and creates clear alignment in the near term, I don’t think we should make permanent token destruction a prerequisite for future team funding.

I’ve always been a staunch opponent of token burns. I don’t think permanently destroying RSR is the best use of protocol revenue today, and I certainly don’t want to tie future token emissions to continued burning. As the ecosystem matures, there may be far more productive uses for bought-back RSR, whether that’s incentives, liquidity, ecosystem funding or simply holding it within a protocol-controlled treasury.

The emissions-and-burns proposal effectively embeds burning into the unlocking framework indefinitely. Given my existing concerns with burns, I’d be particularly uncomfortable making them a structural requirement for future RSR emissions. While we are still searching for PMF, I much prefer the flexibility of setting milestones individually as Reserve develops, rather than making a long-term commitment today about how protocol revenue and RSR should be used years from now.